Merger with MStar is still proceeding, MediaTek says

By Amy Su / Staff reporter, with CNA

Thu, Jan 17, 2013 - Page 13

MediaTek Inc (聯發科), the nation’s top handset chip designer, yesterday reaffirmed its commitment to acquiring local rival MStar Semiconductor Inc (晨星半導體), amid concern that the merger may not go through after the company received regulatory approval to drop a new share issuance plan for the merger.

Shares of MStar — which is registered in the Cayman Islands — plunged to the daily maximum limit of 7 percent in the morning session, but rebounded later in the day to close down 3.1 percent at NT$203.50, Taiwan Stock Exchange data showed.

MediaTek also saw its shares fall 0.64 percent to close at NT$309.50 yesterday, but still outpaced the broader index, which dropped 0.83 percent.

MediaTek said that after discussing the matter with the Securities and Futures Bureau, it decided to withdraw the new share sale application for the merger because the planned acquisition of MStar has yet to secure approval from anti-trust regulators in other countries, such as China and South Korea.

The company was originally planning to issue 220,000 new shares, but a delay in the new share sale raised concerns that the planned merger may fall through.

“The merger plan remains unchanged,” the Hsinchu-based company said in a filing to the Taiwan Stock Exchange before the stock markets closed.

MediaTek said it still expected to complete the merger with MStar on May 1, adding that the company would reapply to the financial authorities to issue new shares later.

The two firms announced plans for the merger in June last year in a deal estimated to be worth NT$115 billion (US$3.95 billion). MediaTek is looking to broaden its product portfolio through the merger in the face of competition from rivals such as Qualcomm Inc and China’s Spreadtrum Communications (展訊通信).

Separately, MediaTek has signed a new licensing agreement with graphics chip designer Imagination Technologies Group PLC, extending its partnership with the British firm to the TV market.

Under the agreement, MediaTek will use Imagination’s PowerVR SGX Series5XT graphics processor family in its system-on-a-chip devices for the digital TV market, Imagination said in a statement released on Tuesday.

Imagination’s graphics processing technology is used in a wide range of mobile devices, including Apple Inc’s iPhone 5 and the fourth-generation iPad, and Intel Corp’s new chips designed for Windows 8 tablet computers.